OFCOM Supports Number Portability

A statement released by the Office of Communications in the UK has made one of the most cogent and reasonable arguments for number portability. Given that phones are now used more widely and reliance on them has grown, the losses that could accrue from change of service providers are a part of the consideration that individuals make. So while this blogger is generally tolerant of very minimal regulation, here is one regulatory measure that has unequivocal support.

The primary reason for my support is that measures to ensure seamless number portability for consumers is great for competition. Transfer of calls to a new network is expected to occur within a couple of hours following a formal communication of change of providers.

Paying for India's Blood Banks

India has recently instituted a plan to restock its blood banks and improve the quality of donations by reducing the proportion of blood that is contaminated with HIV. A report on the iGovernment site describes some of the approaches contained in the plan. Further, the government of India invites private corporations to assist with the safe blood initiative.

This story does not fully state the design of the plan besides emphasis thatblood banks are to be established in 600 districts, I am inclined to think the most cost effective approach. An interesting advantage is India's youthful population who ought then to be encouraged to consider contribution to the blood banks. While this blogger understands that the quality of the supply of blood may also vary by the eligible population, a direct cash payment to the healthy donors would provide an appropriate incentive to ensure that the donors whose contributions expose recipients to the least risks are compensated. That is the assistance that corporate sponsors of the programme should concentrate on as opposed to funding the bureaucracy.

Has Google Heard of Steorn?

In spite of being a regular user of its technology products, I am still unable to define precisely what conventional category of corporations Google would fall in. What I am certain of is that to classify this immensely successful corporation as a provider of search and advertisement services is insufficient. Its interest go to beyond provision of information as evidence of the book digitization project shows and now into deploying the creativity of its human resources towards a search for energy sources that are cheaper than coal-generated power.

An article in the NYT reports that through its philanthropy subsidiary Google is pursuing investments in a number of promising start ups. Knowing that this is a corporation not given to a reckless approach in its business ventures, this search is probably well-considered hence could lead to very high returns.

However, considering the claims by the technology firm Steorn that it had discovered a mechanism for generating free energy, perhaps Google's advisors could consider a review of the ongoing validation of the firm's energy technology. Then again, Google's founders are capable engineers and understand that the claim by Steorn to generate free energy interminably is not only highly improbable but not worth a second look. When this blog first posted here on Steorn, the blogger considered the chances of its success at about 5% and since Google seems not have considered it, then perhaps it ought to be downgraded further. Otherwise, Google has missed the excellent opportunity for the acqusition of a firm that would not only supply the technology to ensure that it not only achieves the goal of renewable energy but limtless and free energy.

Brazil Discovers Oil and Opts for OPEC

Recent Media reports stated that the South American nation of Brazil discovered an appreciable amount of oil deposits within its territory. Estimated at between 5 to 8 billion barrels of crude petroleum and natural gas, this new find is important because it suggests that the peak petroleum supply hypothesis is not the last word yet. However, the reaction of the Brazilian president shows that its approach to this new find is typical of any developing nation that is lucky to discover viable deposits.

As this dated NYT piece by Alexei Barrionuevo confirms, the find has added a bounce to the gait of the Brazilian president and his comments suggest that besides the massive contribution to state revenues, petroleum will be an important factor in its foreign policy goals and public affairs in general. More interestingly, having been a victim of the use of energy fuels as a political weapon, President Lula has unequivocally stated that Brazil will join the OPEC. So much for solidarity among developing nations especially because it is such nations that are most affected by the cartel arrangement. It is commendable however that the commitment to alternative fuels has been retained. Discovery of the Tupi oil field should get Brazil thinking more like Norway and less like the members of that price fixing bunch known as OPEC.

EU Fails Another Audit

Given a choice, I am inclined to favor a smaller as opposed to a large government though this blogger has no strong views about what the ideal size of government should be in the overall. Supra-governments such as the EU seeks to become are therefore an interesting phenomenon for examination.

This news item on the BBC News site documents the significant fact that the financial auditors of the EU have failed to approve and sign the accounts for the 13th consecutive year. It is noteworthy though that the major weakness regarding the accounts is not necessarily related to financial fraud but the failure to adhere to technical requirements. A critical area of failure is the Common Agricultural Policy which is essentially a welfare program for EU farmers. This obviously unsound program is responsible for 40% of the EU expenditure and that suggests where the solution should lead. Scrap the thing and save tax payers the cost of duplicated governments.

Quoting Friedrich von Hayek

" If we are to safeguard the reputation of science, and to prevent the arrogation of knowledge based on a superficial similarity of procedure with that of the physical sciences, much effort will have to be directed toward debunking such arrogations, some of which have by now become the vested interests of established university departments". Friedrich von Hayek on the Occassion of Nobel Prize Lecture on 11 December 1974.

NYMEX and Crude Prices

As petroleum prices have been on an upward trend over the last few weeks, there is understandable panic that this could adversely affect growth in the whole world. No doubt, the rise in the recent days has been more than substantial and it increasingly appears that the US $100 price may be breached during this year. However, the real reasons for the rise in prices are not appreciated widely as this is attributed not only to steady demand from India and China, lack of refining capacity and the effects of the OPEC cartel.

While all these reasons are fairly common, increasingly the idea that speculative behaviour is also a contributor is being mentioned. This means that solutions have come around from price controls within countries, an expansion of refinery capacity and measures to prevent price gouging and into a very bad idea by India's Secretary for petroleum. Mr. Srinavasan is quoted by Heather Timmons of the NYT stating that there should be decisive action to stop trading of crude petroleum on exchanges.

True that speculative action and endeavours to profit from further rises may lead to the rush to buy, it certainly is unimaginative for a person to consider the abolition of a market facility because its price signals are not the right ones. One would imagine that India's brilliant economists would inform the honourable secretary that this is not an effective response. The oil trading facilities as NYMEX merely provide a platform for the revelation of the spot price.

Narcotics Fight Goes Underwater

As if further evidence is really necesary to show that drug control and eradication policy is presently crippled by bad thinking, this report in the LA Times shows that traffickers are using increasingly sophisticated methods to transport drugs north from Colombia. Discovery of the shipyard in which crude submarines were being constructed is an important one for the police. A different interpretation may be that it demonstrates the versatility of traffickers in general hence is not as much a sign of success as demonstration that the fight is moving to the seas.

The success in ensuring the capture of tonnes of drugs that the report means that prices will rise and provide incentives for more production, transportation and sale of narcotics. Essentially therefore, the cat and mouse game persists.

Arbitrage for Models

This blog is certainly not the appropriate place to discuss the profession of modelling. However, news on the BBC News site here shows that even models have began to understand that differences in currency are worthy of consideration while negotiating pay. Gisele Bundchen is reportedly the highest earning model and having opted to negotiate contracts in Euros as opposed to US dollars is in the present circumstances demonstration of sensible economics. It is consistent with rational behaviour in covering future income by pricing in the currency that increases purchasing power. That's a pretty smart model who thinks in the same waves as Warren Buffet.

Further Evidence of Failing Drugs Policy in Afghanistan

Apart from demonstrating ably that state building from scratch can be a particularly difficult task, the state of Afghanistan today may just have the unintended consequence of opening up the discussion on international narcotics policy. At the risk of repetition, this blogger has commented in earlier posts that state that the attempts at the eradication of opium poppy in Afghanistan are ill-informed and bound for failure. Different stories on the International Herald Tribune and BBC news here support that claim in interesting ways. The IHT story states that drug cultivation has not only returned in full force in Balkh province of Afghanistan where it was considered eradicated, but that the farmers have instead opted for cultivation of cannabis. The stated reasons are interesting and relate to price incentives. These are that cannabis is less laborious and more cost-effective to grow in an arid area in addition to a higher yield for acreage. The BBC story states reports that the Senlis Council has taken the initiative to establish an experiment to legalize the cultivation of opium for the production of pharmaceuticals.

Together, these reports are fascinating because the first provides a reminder that the eradication of drug cultivation is increasingly fraught with problems while the other is that a mechanism to get some of those plants to market may be more helpful. I grant that the experiment Senlis Council is worthy of consideration though I suspect that the attempt to limit all production for processing into pharmaceuticals will only establish competition with alternative uses and leakage of drugs to that sub-market would arise over time.

Nevertheless, this shows that substantial steps towards legalization and regulation would be more useful since those simple farmers already understand that their land and labour put together would lead to a very high value product. They would most probably be prepared to pay a tax (which presently is appropriated by the Taliban) than cultivate crops that are obviously less lucrative. Constitutional provisions that bar cultivation will hardly change that reality but will only ensure that the policy is not reviewed appropriately and that poor citizens of that nation will merely see that law as really idiotic.

Quote of the day

"Academics and think-tanks need to be reminded that generating publicity is not a legitimate research objective". John Kay

Warren Buffet Asks to Pay More Income Tax

A story in the Guardian site today quotes Warren Buffet unequivocally stating that he should pay more tax. Reading the piece and having followed Warren Buffet's claims in recent years, he seems genuinely concerned that he presently pays a far lower income tax rate than his employees do. Of the top ten billionaires in the world, I am certain that he is alone not only in commenting on the matter and further that he is intent on giving to philanthropy while being prepared to pay taxes too. He is also unique in not appointing tax planners with the view to reducing his overall tax burden.

As a normative discussion, it is very difficult to reconcile approaches about how to distribute the tax burden and given that fact, perhaps warren Buffet ought to advocate for a reduction of the income tax rates for all his employees to the 17.7% level. This would certainly be far better for them than to merely have Warren Buffet's income tax rate increased.